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Tourism businesses optimistic despite disasters, says study

A majority of small and medium-sized tourism enterprises along key trekking routes are optimistic that they will not have to scale back operations despite last year’s twin disasters of the earthquake and blockade,

A majority of small and medium-sized tourism enterprises along key trekking routes are optimistic that they will not have to scale back operations despite last year’s twin disasters of the earthquake and blockade, a recent survey report said. But they are very interested in diversifying their businesses.

In urban areas, most tourism enterprises are contemplating switching to new business sectors outside tourism.

The survey entitled Impact Assessment: Post-Earthquake and Blockade in Rural Tourism Businesses and Post-Blockade in Urban Tourism Businesses in Nepal showed that business confidence was high among rural tourism entrepreneurs. The report was produced by Siddhartha Connecting Inc and Samarth.

Altogether 192 tourism businesses and 52 individual tourism service deliverers from major trekking regions in Nepal—Annapurna circuit, Everest, Langtang and Manaslu—were surveyed. These four destinations attract 95 percent of all trekkers to Nepal.

The report also integrates an assessment of post-blockade impact on rural and urban tourism enterprises. According to the study, 348 business enterprises were surveyed in the Kathmandu Valley and Pokhara.

About 57 percent of the businesses surveyed in the key trekking areas said they were thinking about diversifying their business within tourism. Likewise, 66 percent said that the earthquake had a bigger impact on their business than the blockade.

According to the survey report, 55 percent of the enterprises said that it would take two or fewer years for their business to recover to a pre-earthquake position, while 30 percent believed it would take more than two years. Meanwhile, 15 percent claimed their business had already recovered.

The assessment that includes surveys of hotels, lodges, tour operators and local restaurants and shops as well as tourist guides and porters shows that average employment numbers have dropped slightly due to the impact of the twin disasters last year.

According to the report, 77 percent of enterprises said that they didn’t have to lay off employees after the blockade. Due to the trade blockade that triggered a severe fuel shortage, significant strides were made in the financing of renewable energy in rural tourism areas.

According to the survey report, 42 percent of respondents in the four trekking locations said that they had invested in alternative energy sources. Among this group, 80 percent said they had invested in solar, 8 percent in community hydropower and 5 percent in induction cookware.

Tourism contributes significantly to the livelihood of people in rural trekking areas of Nepal. For enterprises such as hotels, restaurants and tea shops, and for individual service providers such as trekking guides and porters, income from tourism made up 84 percent and 83 percent of their total 2014 income. In 2015, that amount, for both categories, dropped to 77 percent of total income.

In 2015, enterprises, on average, earned only 53 percent of their 2014 income from tourism. Individual service providers, however, made a surprising 76 percent of their 2014 income from tourism, the report states.

Immediately after the earthquake, urban businesses in and around the tourist hubs of Kathmandu and Pokhara were expecting average business. However, because of the blockade, expectations and realities have a high degree of variation.

According to the report, 50 percent of all businesses said that they had suffered revenue losses in the range of 50-75 percent compared to the previous year. Likewise, 14 percent said they lost 75-100 percent of their revenue and 29 percent said they lost 20-50 percent of revenue compared to last year.

Urban businesses were quite optimistic about the industry despite the earthquake. However, it’s a different story after the trade blockade by India.

As per the survey report, 88 percent of respondents said that Nepali businesses would have to continue to endure manmade crises such as the blockade while 93 percent said they were contemplating switching to new businesses outside tourism.

Urban hotels were expecting an average occupancy of about 55 percent during the September 2015-February 2016 period, while average occupancy during the normal months for the previous year was 92 percent. However, their average occupancy for the months of the blockade was only 32 percent.